Stocks tumbled in extremely volatile trade today as Wall Street reopened after a four-day closing due to last week's terrorist attacks.
The Dow Jones Industrial Average plunged below the 9,000 mark and was trading some 684.81 points (7.13 per cent) down at 8920.70 late this afternoon (9.15 p.m. Irish time).
The Nasdaq composite also moved off its early lows, and was down 115.83 points (6.83 per cent) to 1,579.55 .
Just before the opening, the US Federal Reserve cut interest rates sharply in a bid to prevent the United States plunging into recession in the wake of the deadly attack on the World Trade Center.
However, within ten minutes the Dow Jones Industrial Index was down 225 points and the tech-heavy Nasdaq over 100 points as investor confidence took a knock on fears of huge company losses as a consequence of the Trade Center catastrophe.
The Fed said it was cutting the federal funds rate to 3 per cent from 3.5 per cent, its eighth rate cut this year. The largely symbolic discount rate was also eased, to 2.5 per cent from 3 per cent. US rates are now at their lowest level for seven-and-a-half years.
There were emotional scenes on Wall Street as the market reopened for the first time since Tuesday's attacks by hijacked planes that have devastated much of the financial district and left thousands of people - traders, analysts and investment managers - dead or injured.
The NYSE chairman called for two minutes' silence followed by the singing of God Bless Americaby a female Marine major.
The reopening was performed by representatives of the firemen and other emergency services to loud cheers and applause.
Chairman of the New York Stock Exchange Mr Richard Grasso called the rescue services "those wonderful men who put their lives on the line and allow us to do what we do". The Federal Reserve said the US economy was shaky even before last week's attacks and was at greater risk now.
"The Federal Reserve will continue to supply unusually large volumes of liquidity to the financial markets, as needed, until more normal market functioning is restored," it said.
"As a consequence, the FOMC [Federal Open Market Committee] recognises that the actual federal funds rate may be below its target on occasion in these unusual circumstances".
The Fed also warned that "last week's events have the potential to damp spending further". It said it believed the US economy continued to face a bigger risk from weakness ahead than from a possible surge in inflation, signalling it stood ready to make more cuts.
The US economy was in danger of slipping into recession before last Tuesday and the risk is now higher as many companies will report huge losses from the nation-wide travel paralysis and its aftermath.
The depth of the psychological impact on Wall Street has yet to be fully appreciated. Despite intense competition, the financial world is a close-knit community, and almost everyone will know some of the victims among the 40,000 brokers, traders and analysts who worked in the twin towers.
Meanwhile, Britain's FTSE rose, bolstered by the U.S. rate cut and a shallower than expected slide on Wall Street on the first day of U.S. trade since last week's terror attacks.
Blue-chip oil, drugs, banks and telecom shares drove the gains in the FTSE 100 which closed up 143.2 points or 3.01 per cent at a high for the day of 4,898.9.
The index, however, is still down four per cent from its level before Tuesday's attacks and down 21 percent so far this year.
The toll of missing from the catastrophe is 5,097 missing, now presumed dead. The attack practically wiped out some major financial firms such as Cantor Fitzgerald, which lost all 750 employees in the Trade Center.